The invention relates to a system for and method of effecting an electronic transaction, and particularly to a system for and method of effecting an electronic transaction between a first entity and a second entity utilizing a third entity as a transaction facilitator.
When a consumer performs a debit transaction at a merchant's or service provider's (collectively referred to as “business entity”) brick-and-mortar place of business, the consumer typically provides debit financial information and a debit password. The financial information, which includes account data, may be stored on a magnetic strip card that is scanned by a magnetic card reader (e.g., a point-of-sale device). Upon scanning the card, the consumer enters a debit password into the card reader. The information is then transmitted to a third party to perform the debit transaction. When a debit transaction is performed over the Internet, the debit information is supplied by the consumer directly to the merchant over unsecured lines, thus placing the consumer at more risk than with a conventional debit transaction.
In certain transactions, the business entity may not receive payment at the same time that the goods are shipped or that the services are performed. This often occurs where the purchase involves a payment plan requiring recurring payments. Nevertheless, the financial information is still requested prior to performing the services or prior to shipping the goods. The consumer may have a natural reluctance to provide this information to be used in an ongoing manner to effect recurring payments.
In other transactions, the business entity may require additional information not typically included in conventional debit transactions. For example, if the consumer is purchasing alcohol, the business entity may be obligated to confirm that the consumer is of legal drinking age. In other transactions, the business entity may be required to determine the consumer's place of residence. For example, the business entity may have to tax the consumer based on the consumer's place of legal domicile. The above determinations, and others like them, are difficult to determine in the context of an Internet transaction.